How to buy property in Dubai if you're not a resident

All the details you need to know about property buying process in Dubai

Foreigners are entitled to purchase residential properties that are located in designated leasehold or freehold areas, and the process of buying is relatively straightforward.

Dubai’s residential market opened up to foreigners in 2002, and has attracted many expat and overseas buyers since. Foreigners can purchase property in leasehold areas, which tend to be near the city centre, or in freehold areas, which are spread out across the emirate. The number of units available to foreigners has increased significantly over time with an abundance of apartments, villas and townhouses currently on sale.

The emirate’s tax-free status has undoubtedly played a key role in attracting foreign investment. Residential properties in Dubai remain tax-free after the introduction of a Value Added Tax in the UAE in 2018. These properties are either zero-rated or exempted from tax altogether.

Another perk of investing in Dubai properties is the provision of a residential visa to foreigners (and their dependents) who invest at least AED 1 million in a completed freehold property with a valid title deed (in other words, this visa is not eligible for those who have invested in off-plan properties). The following residential visas are available:

• 3-year renewable visa if the property investment is AED 1 million or above

• 5-year renewable visa if the property investment is AED 5 million or above

• 5-year renewable visa for ‘retirees’ over 55 years in age, if the property investment is AED 2 million or above

The process of buying a property is fairly straightforward. The foreign buyer must simply hold a valid passport – a resident visa is not required. The buyer can work with local real estate agents or directly with the developer to find the right property and complete the necessary formalities.

According to consultancy Knight Frank, the average property transaction in Dubai takes 30 days to complete, from the date on which the Agreement for Sale was signed.

Request Dubai Property Guide now

Be the first to get Guide to buying property in Dubai incl. updated property prices, purchase process steps, investment advice and expert opinions.

What are the criteria of the right property offer?

Dubai offers a broad range of apartments, villas and townhouses for sale in freehold areas, with many developers and communities to choose from. Online Dubai listings on Properstar are a great place to begin the hunt for a property.

To get started, below are some criteria and things to consider:

• Apartment or villa/townhouse? Residential apartment buildings tend to be focused along the main highway, Sheikh Zayed Road, or near the coast in communities such as Jumeirah Beach Residence, Dubai Marina, Greens and Jumeirah Lake Towers. Some villas are located near the coast, but these are quite limited in number and may not be available for sale.

Villas and townhouses tend to be focused in inland from the coast, in communities such as Emirates Hills, Meadows and Springs. There are also many villa communities further inland, in communities such as Arabian Ranches, Dubai Sports City and Jumeirah Village Circle. Several of the inner communities such as Jumeirah Village Circle and Dubai Motor City also host numerous apartment buildings.

• Ready-to-move in or off-plan? Both apartments and villas/townhouses are available as off-plan investments, and usually at attractive rates since. The developer will typically showcase a plan for the overall community and floor plans for the units available. Some developers will have a show flat or show villa available to demonstrate the type of space and fit out that can be expected.

Off-plan properties come with an element of risk. Delays in construction and delays in handover are quite common nowadays. Very occasionally, a project may be stalled or cancelled altogether. Payments for off-plan properties are typically tied to the progress of construction, with various schemes on offer from different developers. Check more details about pitfalls to avoid.

• An investment to rent out, or family home? If this property is intended as an investment, consider the current rental yields across different communities using tools such as Property Monitor’s Rental Index and the Dubai Land Department’s Rental Calculator. Also consider the age of the apartment building or villa, which can impact the resale value of the property.

If the property is intended as family home, the location will be one of the key criteria that should be taken into consideration: o Proximity to place of work o Proximity to schools of choice o Rush hour traffic (if any) o Availability of parking in the community. Parking is a treasured commodity in communities such as Dubai Marina and JLT. Check the number of parking spots included with the property and the availability of paid and free parking within the community. o Proximity to public transportation. Public transport in Dubai includes the Dubai Metro, Dubai Tram and a network of busses. o Proximity to nearest supermarkets, clinics, parks o Cleanliness and quality of maintenance of the community and amenities o Amenities offered within the community such as gym, swimming pool, children’s play area, ballroom etc. o Community Maintenance or Service fees. These fees cover the upkeep of the community and salaries of security guards, cleaners and maintenance staff. The fee is usually calculated per square foot, with a bigger property commanding a higher fee. Some developers/owner’s associations charge the fee upfront on an annual basis, while others may charge upfront on a quarterly basis. o ‘Chiller’ fees for use of air conditioning. Some apartment buildings impose a minimum monthly fee regardless of whether central air conditioning services are used or not. o Rules imposed by the community. Some communities or apartment buildings can impose inconvenient rules such as restrictions around the usage of service elevators or unnecessary regulations regarding independent handymen. Some villa communities impose restrictions around the type of renovations that can be conducted.

• Importance of the Developer/Community Research the developer or community online to understand the scale of projects they have completed, quality of maintenance of the community, any historic delays in delivering projects and reviews of residents currently living in specific communities. This research can be especially useful in determining how complete some of the newer communities are, in terms of basic amenities from water and electricity, to completion of community clubhouses and supermarkets.

Some of the major developers in Dubai include Emaar, Meraas, Nakheel and DAMAC Properties.

Buying Resale Property (freehold) - steps

1. Viewing or inspection of the property Make sure to use a RERA-licensed agent, and avoid visiting the same property with multiple real estate agents as this can lead to a dispute over which agent deserves the commission. The seller must have a valid title deed to the property. The Dubai Land Department offers ownership authentication services, if these are required.

2. Agreement of Sale or MOU between buyer and seller At this point, a deposit (usually 10% of the sale value) is paid in the name of the seller. If the purchase is made directly from the developer, the brokerage fees will typically not be charged.

3. Financing to be secured Any mortgage or outstanding payment against the property must be cleared before the sale can be finalised (this includes any mortgage cancellation fees). If the property is being purchased with a fresh mortgage, the buyer’s bank will likely inspect the property in order to carry out a valuation. Typically, a down payment of 25% is required from foreign buyers.

4. No Objection Certificate to be secured A NOC from the developer is a mandatory requirement when transferring a property to a new owner. The seller will apply the NOC and ensure all maintenance/service fees and bills are cleared in order to obtain this document. The NOC may be subject to a nominal fee, to be paid by the seller. The developer may also require to pay a refundable deposit to be returned when a copy of the new title deed is presented.

5. Registration with Dubai Land Department (DLD) Both buyer and seller must be present in person to complete the transaction. A power of attorney may represent the individual in case they are unable to attend.

6. The final payment for the property (made in the name of the seller) and any additional fees should be cleared at this point. The following fees typically need to be paid: a. 2% brokerage fee to the real estate agent b. 4% transfer fee to the DLD (typically split as 2% from the buyer and 2% from the seller) c. approx. AED 4,000 fee to DLD for registration of property (for properties over AED 500,000 in value) d. approx. AED 500 fee to DLD for issuance of the title deed e. Mortgage registration fees to DLD (if applicable – the fee is 0.25% of the loan value)

In addition, buyers must be prepared to pay any necessary maintenance or service fees to the developer/ owner’s association on an annual or pro rata basis.

7. Issuance of the title deed in the name of the buyer The title deed is the recognized certificate of ownership in Dubai and issued by the DLD. Once the title deed is issued, the keys are handed over to the buyer.

After the purchase is complete, an application should be made to update the ownership records with DEWA – the Dubai Electricity and Water Authority. The seller’s signature may be required for this application, and a new connection fee will apply.

Buying off-plan property from developer - steps

The process of buying an off-plan property directly from the developer is slightly different.

1. Inspection of the property plans or a site visit to see the progress in construction and potentially a show flat or show villa.

2. Confirmation that the project is registered with RERA In order to safeguard investors in off-plan properties, RERA - the Real Estate Regulation Agency - requires the developer to own 100% of the land belonging to the project. In addition, the developer must arrange a bank guarantee for 20% of project value - or complete 20% of the construction before selling off-plan units. RERA also requires deposits and payments are made into a RERA-approve security account.

3. Reservation/application form to the developer It will include basic terms of the sale, payment plan and personal information of the buyer (including a copy of the passport).

4. Selection of the unit It's the actual apartment or villa/townhouse.

5. Payment of initial deposit The amount of money to pay can vary significantly from 10% to 50%. Subsequent payments will usually be linked to phases of completion, though this may vary by developer or the agreed upon scheme.

6. Issuance of an initial agreement of sale, or ‘oqoodi’ The registration process for off-plan properties takes place at the developer’s office and a certificate of ownership, called the initial agreement of sale or ‘oqoodi’ is issued in the buyer’s name. DLD fees such as the 4% transfer fee and administration costs will apply for off-plan purchases as well.

Property rules and regulations are updated frequently in Dubai. Contact the Dubai Land Department (DLD) and the Real Estate Regulation Agency (RERA) to find out the latest procedures. Both organizations are extremely accessible to buyers and landowners and can be contacted via the web, by phone or visited in person.